Greenspan: Fed Will Have to Raise Interest Rates

U.S. Federal Reserve Former Chairman Alan Greenspan said Friday the Fed will have to tighten monetary policy to put a brake on inflation and said the worst of the U.S. credit crisis may have passed.

Growing inflationary pressures have led the U.S. central bank to recently shift to more aggressive anti-inflation rhetoric, and expectations are rising that policymakers will raise benchmark U.S. interest rates within months.

"If you're going to keep inflation rates down ... the Federal Reserve is going to have to put increasing pressure on the money supply and reserves, and as a result we're going to see interest rates rising," Greenspan said via video link to an event in Mexico.

Soaring gasoline prices helped drive up the U.S. consumer price index in May at the fastest rate in six months, the government said on Friday, although "core" prices, excluding food and energy, remained tame.

Greenspan, who attained almost cult status for his insight into financial markets as head of the U.S. central bank, said weakness in financial markets probably peaked in March but that it was hard to say how long the crisis would would last.

"It can struggle along for a while. It could get worse, it could get better," he said.

greenspan just can't stop talking. the dude loves to hear the sound of his own voice. all he does is state the obvious and say whatever the prevailing opinion of the time is. the guy has turned into a complete joke.

I think most of us realize that Greenspan is now commenting on the very seeds of destruction that he (not exclusively, but in very large part) was central to sowing.

He pushed money like crack cocaine. He inflated the money supply like no one before him, and he did it proudly. His actions directly created the biggest housing bubble know to human history, that we are now dealing with aftermath of - the housing bubble. Bigger than tulips or dot.com certificates of stock.

That he sits back now, and smugly interjects his opinions, observations and has the balls to act as if what's happening is some sort of random order (a paradox, I know), and almost seemingly suggests he is just some passive observer of economic history, and that no one confronts him directly and asks him how it feels to watch the aftermath of the decisions he made and actions he took, is the ultimate testament to American lack of demand for accountability from anyone. Anyone.

You can be truly terrible at doing something that affects billions of people, hatch the ultimate 'mis-master plan,' reap destruction, and then sit back afterwards when Rome is burning, and be a color commentator, listened to, paid to speak at seminars - actually be given credibility of some fairly serious proportions.

I think most of us realize that Greenspan is now commenting on the very seeds of destruction that he (not exclusively, but in very large part) was central to sowing.

He pushed money like crack cocaine. He inflated the money supply like no one before him, and he did it proudly. His actions directly created the biggest housing bubble know to human history, that we are now dealing with aftermath of - the housing bubble. Bigger than tulips or dot.com certificates of stock.

That he sits back now, and smugly interjects his opinions, observations and has the balls to act as if what's happening is some sort of random order (a paradox, I know), and almost seemingly suggests he is just some passive observer of economic history, and that no one confronts him directly and asks him how it feels to watch the aftermath of the decisions he made and actions he took, is the ultimate testament to American lack of demand for accountability from anyone. Anyone.

You can be truly terrible at doing something that affects billions of people, hatch the ultimate 'mis-master plan,' reap destruction, and then sit back afterwards when Rome is burning, and be a color commentator, listened to, paid to speak at seminars - actually be given credibility of some fairly serious proportions.

All as if you deserve praise.

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Ditto the Bush Administration and Britain's Tony Blair for what they have done in Iraq and elsewhere. That 's why I am now convinced, History, just as most of what we read in the press, is a LIE.

But back to Greenspan, thanks to the ridiculous cult status of US central bankers the man's ego has become as inflated as the bubbles he created , this is probably one of the primary reasons behind the problems, Fed officials are given too much influence, way too much air time and their terms should be shortened. Actually replacing them with a computer could be the solution.

He makes a ton from his speeches and from his true understanding of how economies function and malfunction. Blowing up and pricking bubbles was Greenspan's legacy. He knows this. His inflationary policies will live long beyond his tenure.

He really DOES understand economics - I think it's safe to say that he KNOWINGLY did what he did (create massive inflation) for ego and political purposes. It's a lot harder to do the right thing when it's not politically expedient. Hence, the major flaw in having a central bank - economic manipulation for the benefit of very few. Elitism, greed, and lies are unfortunately the cornerstones of the Fed's policy.

Bernanke is the Miller to Greenspan's Burns.
Who will be the Volcker and when will he come?

greenspan just can't stop talking. the dude loves to hear the sound of his own voice. all he does is state the obvious and say whatever the prevailing opinion of the time is. the guy has turned into a complete joke.